ASHINGTON, July 17 -- In a defeat for horse-racing interests and
the casino industry, the House failed
today to approve a bill to ban most
forms of gambling on the Internet.

A majority of House lawmakers
voted in favor of the bill -- 245 supporting it, with 159 opposed -- but
advocates failed to reach a two-thirds threshold required to speed its
passage without amendments. Thirty members abstained.

The bill attempted to curb one of
the fastest-growing activities on the
Internet, betting on casino-style
games and sporting events. There
are more than 700 wagering sites on
the Web, which generate more than
$1.2 billion a year, industry analysts
say.

The bill, which was sponsored by
Representative Robert W. Goodlatte,
Republican of Virginia, would also
have prohibited the sale of lottery
tickets online.

"One way to promote the Internet
is to make sure that the seamy side
of life is dealt with on the Internet,"
Mr. Goodlatte said. He compared the
unregulated spread of cybergambling to the proliferation of child
pornography.

The legislation was backed by an
unlikely alliance of Christian evangelists, who invoked moral arguments against the explosion of gambling at home, and horse-track operators and liquor store owners, who
saw it as a direct threat to their
profits.

But an equally odd coalition
thwarted the bill, including Republican governors, online sports bookies
and operators of computer casinos
based in Caribbean resorts and tax
havens like Antigua and Belize.

Horse racing, greyhound racing
and jai alai were exempted from the
bill after lobbyists convinced lawmakers that it would jeopardize the
use of closed-circuit television for
off-track betting.

Sue Schneider, the chairwoman of
the Interactive Gaming Council,
praised the House defeat, telling The
Associated Press that "cooler heads
have prevailed here."

While Internet gambling entrepreneurs concede that their industry
should be regulated -- and possibly
even taxed -- Ms. Schneider argued
that the proposed ban would have
been unenforceable because technology was evolving so quickly and Internet operators are adept at outpacing the federal authorities.

Ms. Schneider's organization
called for legalizing and regulating
the practice, as has already occurred
in 50 other countries.

Opponents of the booming industry
noted that the value of online wagers
is doubling every year, and is making gambling available in states
where it is not legal. The Web sites
are available to anyone with a credit
card and a computer, making them
especially enticing for compulsive
gamblers, they said.

About one million Americans gamble online every day, according to a
recent telephone survey of Internet
users by the Pew Internet and American Life Project. About five percent
of all Internet users, or about 4.5
million Americans, have wagered
online, the survey found.

Revenues from Internet gambling
are expected to exceed $3 billion by
2002, according to groups that track
the industry.

Despite today's defeat, Advocates
of a ban said they might seek to
introduce another bill under terms
where a simple majority would prevail. They fell 45 votes shy of those
needed today.

Among the groups supporting the
ban are the National Association of
Attorneys General, the National
Council of Churches, Focus on the
Family, the Family Research Council, Major League Baseball and the
National Association of Convenience
Stores.

The Clinton administration opposed the bill, with officials voicing
concern over the exemptions for
horse racing, dog racing and jai alai.

Opponents of the bill lobbied heavily against it by drawing on money
from the gaming council, an association of dozens of online betting sites
whose business has grown at a pace
to rival that of some major Internet
retailers like Amazon.com.

Many governors also registered
their opposition to the legislation,
saying the curbs might undercut the
ability of states to raise revenues
through the sale of lottery tickets
online. Technology companies promoting in-home lottery sales spent
hundreds of thousands of dollars lobbying against the bill.